Claire Barnes is the fund manager of the Apollo Asia Fund, one of the best (if not the best) Asian small-cap value funds. Her bio:
http://www.apolloinvestment.com/cbarnes.htm
The fund, based in Malaysia, is recommended by Marc Faber, about who I wrote in the past:
http://cgmalaysia.blogspot.com/search/label/Marc%20Faber
Here is the chart of the Apollo Asia Fund with the impressive out-performance of the relevant index:
http://www.apolloinvestment.com/performance.htm
Claire writes a blog on her website, sometimes a bit infrequent, but always highly interesting:
http://www.apolloinvestment.com/whatsnew.htm
This time she writes about two Malaysian issues:
[1] "Padini Holdings is holding its AGM on Friday 23rd December. We have notified the company that we will be voting against the reappointment of the auditor and reelection of the newly-appointed director, and would gladly share our reasoning with interested investors."
Padini is an interesting company, one of the rare Malaysian branded fashion and footwear companies (another well known one is Bonia). It has a very strong balance sheet with lots of cash and relatively low loans. But the worrisome part is the high inventory of more than RM 214 million which has been increasing quite fast lately (exactly one year ago it was only RM 98 million). Padini has tried to increase its exports, with limited success.
[2] The Securities Commission is soliciting feedback on whether poll voting should be mandatory (public consultation paper on 'independent chairman and voting by poll', responses due by 15 Dec). Our answer is yes, and the results should be reported. David Webb lucidly explained why, back in 2003: '... you don't have to win each vote to make your point, but there's no point in standing up if you won't be counted. If, for example, the majority of independent shareholders voted against the reappointment of an independent director, but the controlling shareholder used his 51% shareholding to re-elect his friend, then the market should still be informed of the outcome and the level of the opposition... We cannot even begin to contemplate management accountability in Hong Kong without transparency in the voting process.' The long campaign by webb-site.com explains the case for poll voting in detail. Malaysia should go for it.
I hope that the advice of Claire Barnes and David Webb is followed by the SC.
What's wrong Padini's inventory is increasing as they are opening more outlets? By the way why Claire oppose the appointment of one of they director? Is there any detail from Claire. This is one of the stock under my radar due to its high ROE and growth in the last few years.
ReplyDeleteHi, thanks for your comment. By the way, Padini is also on my radar screen, it has been for a long time, I once also owned it. It is indeed a nice company, strong balance, and a brand name. I hope I didn't sound too negative in my article about Padini, that was not intended.
ReplyDeleteInventory: +118% in one year, surely the number of outlets hasn't doubled? Sales is nicely up, but only 30%. In this industry overstocking and aged inventory is a real problem, my company has invested in a business who is taking care of this problem, so I know a little about the problems. A simple black t-shirt is not much of a problem for aging, but very trendy goods are.
Please ask Claire yourself. I didn't want to ask her and put it in my blog, since that was obviously not her intention, otherwise she would have done it herself.
Thanks for revealing the impact of over stocking. I didn't directly own Padini but I own it indirectly through ICAP. Regarding Claire's opinion on reappointment of the director, I will email Claire directly.
ReplyDeleteAh, then I also indeed own Padini since iCap is the only normal Malaysian share that I own, I forgot about that.
ReplyDelete